* Canadian dollar at C$1.2564, or 79.59 U.S. cents
* Bond prices lower across the yield curve
TORONTO, April 18 (Reuters) - The Canadian dollar steadied
against its U.S. counterpart on Wednesday after notching an
eight-week high the day before, as investors turned their
attention to the Bank of Canada's interest rate announcement.
The central bank, which is expected to leave its benchmark
interest rate on hold at 1.25 percent on Wednesday, will also
release its updated economic projections. The announcement is
due at 10:00 a.m. EDT (1400 GMT).
An uncertain outlook for trade has been one of a number of
issues that has worried the central bank since it last raised
rates in January. But prospects of a deal to revamp the North
American Free Trade Agreement have improved recently.
The top U.S., Canadian and Mexican officials driving NAFTA
renegotiations will meet in Washington on Thursday, a Canadian
government source said on Tuesday, as pressure for a quick deal
mounted.
At 8:40 a.m. EDT (1240 GMT), the Canadian dollar
was trading 0.1 percent lower at C$1.2564 to the greenback, or
79.59 U.S. cents.
The currency traded in a range of C$1.2548 to C$1.2598. On
Tuesday, it touched its strongest level in nearly two months at
C$1.2528.
The Canadian dollar is on course to strengthen in April for
the eighth time in the last 10 years, a sequence strategists
link to seasonal vitality in stocks and energy products,
rewarding investors who trade on market patterns.
The price of oil, one of Canada's major exports, was lifted
by a reported decline in U.S. crude inventories and the risk of
supply disruptions.
U.S. crude prices were up 1.8 percent at $67.69 a
barrel, while U.S. stock futures rose after the latest batch of
results including Wall Street bank Morgan Stanley added
to optimism about the U.S. corporate reporting season.
Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year bond
fell 3.5 Canadian cents to yield 1.905 percent and
the 10-year bond declined 20 Canadian cents to yield
2.272 percent.
On Monday, the 10-year bond yield touched its highest level
in nearly four weeks at 2.292 percent.
(Reporting by Fergal Smith
Editing by Paul Simao)